The OBA Battle Continues

May 27, 2011

Since January, there have been important legislative actions relating to online consumer privacy and Online Behavioral Advertising (OBA), which could have very significant effects on the future of online advertising and the Internet ecosystem. Meanwhile, the Digital Advertising Alliance's (DAA) Self Regulatory Program for Online Behavioral Advertising, in which ANA is a key player, has been steadily increasing its visibility and also ramping up its enforcement efforts.

Four major privacy bills have been introduced in the House of Representatives. Congresswoman Jackie Speier (D-CA) introduced a bill, H.R. 654, that directs the FTC to establish a "Do-Not-Track" regime, which would allow online users to opt out of having their information collected for the purposes of online behavioral advertising and other tracking. Congressman Bobby Rush (D-IL) has a bill, H.R. 611, that is similar to his bill introduced in the last Congress. Congressmen Cliff Stearns (R-FL) and Jim Matheson (D-UT) have introduced a bill, H.R. 1528, that calls for consumer opt-outs of data collection that would last for five years and prescribes standards for the FTC to approve self-regulatory programs. Finally, Congressmen Ed Markey (D-MA) and Joe Barton (R-TX) have introduced a bill, H.R. 1895, that prohibits the collection and use of data from children and teens for the purposes of behavioral advertising and creates a so-called "Eraser Button" that would allow for the deletion of publicly available personal information by consumers.

Two bills have been introduced in the Senate. Senators John Kerry (D-MA) and John McCain (R-AZ) have introduced S. 799, which provides a safe harbor provision for self-regulatory program participants, but calls for companies to provide "a robust, clear, and conspicuous mechanism for opt-out consent for the use by third parties of the individual's covered information for behavioral advertising or marketing." "Robust" is not a defined legal term, so the scope of these restrictions remains in doubt. Senator Jay Rockefeller (D-WV) has a bill, S. 913, that provides for the FTC to create standards for a "Do Not Track" mechanism.

In February, New York State Assemblyman Brian Kavanagh introduced a bill, AB4809, which would require companies to provide consumers with sweeping opt-out mechanisms for data collection used for OBA. A bill with similar requirements, SB 761, was introduced by California State Senator Alan Lowenthal in April that would allow California's Attorney General to enforce regulations with significant monetary penalties.

All of these bills, if enacted into law, would greatly affect the ability of marketers to effectively reach consumers. In short, these proposals are premature. They will lock a rigid set of rules into place in an area that is highly technical and rapidly evolving. So-called "Do-Not-Track" browser-based mechanisms that do not include the requirements of the DAA self-regulatory approach, such as clear definitions of coverage, consumer transparency, and monitoring and enforcement, cannot be fully effective in the marketplace. They are technologically difficult to implement, and they will likely do little more than result in a larger number of advertisements with less relevance to individual consumers being served.

Data collection through the use of cookies also serves many other legitimate business practices, such as frequency capping of advertisements and website management. In addition, the implementation of regulations at the state level would create a checkerboard of competing regulations for companies to follow, making compliance both costly and difficult.

In 2009, the FTC challenged our industry to develop a strong and meaningful self-regulatory system that would provide consumers with clear notice and choice about how their information is collected and used online. Our program does just that. When consumers are served an advertisement based on online behavioral advertising, they see an icon which will direct them to a website where they can learn about OBA and opt out of tracking. To ensure this is an effective self-regulatory program, enforcement of this program is handled by the Council of Better Business Bureaus (CBBB) and the Direct Marketing Association (DMA). The program was launched last fall. Numerous companies and ad networks have signed on to the program, and the icon is quickly proliferating on a number of sites. In fact, there have been multi-billions of placements of the icon already since October.

The best approach to this issue is industry self regulation. It will allow companies to provide consumers with meaningful choices about their information, while allowing the industry to adapt effectively in this constantly changing arena. A self-regulatory effort will best succeed with widespread participation from companies. We continue to encourage all ANA member companies and others in the online ecosystem that use OBA to sign up for the program. Doing so will help companies to ward off overly restrictive and burdensome regulation and build trust among consumers by providing meaningful protection of their information.